ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Wednesday, December 28, 2005


the curve inverts

it won't be reported on many (or any) political blogs, but a momentous and forboding event took place yesterday when the american treasury yield curve inverted intraday for the first time since the peak of the nasdaq bubble in 2000.

this page has previously considered the ramifications of this perhaps inevitable day, beginning in february of this year with a definition; in march within the context of financial conditions; again in march with respect more specifically to the carry trade; in september and again in november with regard to the massive global debt/housing bubble.

some depressing voices are can be heard from the wilderness, including that of prudent bear manager david tice and pimco's bill gross, who thinks that extreme weakness in housing over the next few months could stop the federal reserve's program of rate hikes.

what i wrote in september continues to express my view.

the lender, ultimately, is in control of this bubble -- the borrowers of the masses would likely immolate themselves on ever-more debt for so long as lenders grant them the rope with which to hang themselves. it is when the lender -- not the borrower, but the lender -- decides that the terms are no longer advantageous that the bubble will pop. banks will only lend for so long as there is money in lending; even as banks now function only as irresponsible pass-through fee generators, without actually having to profit from interest-rate differentials themselves, a disappearance of buyers for their mortgages (and securities backed with them) will be the consequence of unprofitability in lending long-term with funds borrowed in the short-term -- that is, when the yield curve inverts.
this drying up of the investment end of the carry trade is already being seen in declines in mortgage-backed securities at the riskiest fringes of the market.

this is a warning to the observant. coincident with sharply lower future expectations and declining leading indicators, a bull-flattening curve signals an imminent end to lending expansion in the american economy and the onset of a contraction and recession -- if not worse, given the massive imbalances in the global economy and the need of an immense deleveraging of the kind not seen since the years 1914-45. such an event has been in the wings since the late 1990s, when analytical heads first began to talk about the frightening quantity of borrowing in the global financial system. the federal reserve bank under alan greenspan delayed that deleveraging by radically cutting rates in the aftermath of the 2000 curve inversion and the popping of the global equity bubble. but, in doing so, greenspan opened the floodgate to a massive and unanticipated expansion of consumer borrowing from those already lofty levels, making the eventual inevitable vastly more damaging, painful and uncontrollable -- uncontrollable, particularly meaning the vanishing authority of american policy over global economic management through the dollar, which has become a potential horseman of economic apocalypse.

weathering such a storm as we may be entering without sustaining traumatizing destruction -- globally, nationally and personally -- is a very difficult, perhaps impossible task. i wish you luck, as i hope you wish me luck.
yield curve data is updated daily here.


Tuesday, December 20, 2005


the experiment

jacob sullum at reason examines the shocking, stunning efforts of the bush administration to defend the lawless wiretapping and other excesses of their burgeoning fear state.

The Bush administration, for its part, does not seem to be arguing that the eavesdropping was authorized by FISA itself. Instead it says Congress authorized the wiretaps when it gave the president permission to use "all necessary and appropriate force" against the nations, groups, and individuals responsible for the September 11 attacks. It's doubtful that's what members of Congress thought they were doing. Sen. Russell Feingold (D-Wis.), who voted for the resolution, says "nobody, nobody, thought when we passed a resolution to invade Afghanistan and to fight the war on terror...that this was an authorization to allow a wiretapping against the law of the United States."

But according to the Bush administration, it does not really matter what Congress intended, because the president's inherent powers as commander in chief of the armed forces include the authority to override FISA and any other statute that purports to prevent the NSA from doing what it did (and continues to do). This is the argument that seems most consistent with Bush's M.O. In areas such as military tribunals, detention of "enemy combatants," and national security letters, he has sought to cut out the legislative and judicial branches from prosecution of a never-ending war with targets he himself defines and tactics he alone approves.
this page sees no difference between this method of government and tyranny. the administration has finally come forward, in what less insightful media are calling a spirited defense of the war on terror, and admitted in so many words that their plan is to abandon the separation of powers and usurp the authority of the legislative and judicial branches, ostensibly for the safety of the american people. and they do so openly -- that which nixon, knowing the lawlessness of its ways, tried so hard to hide this administration claims as a badge of its honor.

perhaps that should be no surprise. no serious observer could have missed the fact that the driving force behind this administration is not, for the most part, the president but his vice, dick cheney. it is cheney's feral loyalty to rumsfeld that has kept rumsfeld in office despite fatal incompetence, for rumsfeld first hired cheney in washington under the auspices of the nixon administration. historian and author james mann has spoken in depth about rumsfeld, cheney and those formative years of the 1970s under nixon and ford, as has bruce shapiro at salon.

it should be said that these two ancient allies are not neoconservatives, per se. men like paul wolfowitz and michael ledeen, academic trotskyites descended of leo strauss, are where the core of neoconservatism lies. cheney and rumsfeld -- and, therefore, the trusting unintellectual bush -- may have allied themselves deeply with neoconservatism in the aftermath of september 11 (so transformatively as to lead brent scowcroft to say that he doesn't know cheney anymore) but are, at core, less naive ideological plebiscitarian revolutionaries than men deeply frightened with social deterioration and decadence in western civility. rumsfeld's time at nato in the early seventies was the cauldron in which his anti-european mindset was born; he and his aide-de-camp cheney ever after have revulsed at the notion of a europeanized america, which they must see as broken and weak following decades of 20th c warfare, fully fleeing this country's history and heritage.

where men like wolfowitz, as ardent rousseauians, believe that political nirvana lies in an fictional, invented populist vision of global democratic revolution which means a perpetual war with the world, men like cheney and rumsfeld seek something less -- authority, of a truly hadrianic scale, with which to mandate the resuscitation of the west which neoconservatism naively believes, as an article of faith, would be the spontaneous issue of global democracy.

one of the seminal experiences of these young men in washington was the freedom of information act, passed by congress over president ford's veto and their efforts, which they saw as an incomprehensible weakening of executive authority -- just at the time when the united states, indeed the globe needed (in their view from the white house) a powerful knight errant in america's highest office. this perception still colors their mindset, both in their constant crusading against any limitation on executive prerogative and a contempt for the authority of legislation in the face of nothung -- of need.

these two, like others before them in recent western history, have concluded that western deterioration can only be repudiated by authority -- a powerful counterpoint to enforce order where there is chaos, to bring safety where there is danger, to rebuild where there has been loss, to reconquer where there has been retreat.

even as political winds have changed and neoconservatism has retreated in the aftermath of the disaster in iraq -- the resultant chaos which has served merely to empower that which the administration sees as a yet more serious threat which merits truly mindless paranoia as a challenge to meticulous american stage management of global events -- the mindset of a dangerous, unpredictable, declining world which can only be saved by powerful heroic action in defiance has merely been reinforced for these conservative managerial imperialists.

now, it seems, with a more idealistic vision being cast aside, a new realism has set in with the administration's highest circle -- one which views american dissent, jurisprudence and legislation itself as contemptible, even threatening inconveniences.

it may take some time for the mass of the press or the citizenry to come around to recognizing the reality of what has happened in the bush white house and the profound implications for american, indeed western society. but there can be little doubt now. the united states is governed by a despotic hierarchy, a dictator.

By the article establishing the executive department it is made the duty of the President "to recommend to your consideration such measures as he shall judge necessary and expedient." The circumstances under which I now meet you will acquit me from entering into that subject further than to refer to the great constitutional charter under which you are assembled, and which, in defining your powers, designates the objects to which your attention is to be given. It will be more consistent with those circumstances, and far more congenial with the feelings which actuate me, to substitute, in place of a recommendation of particular measures, the tribute that is due to the talents, the rectitude, and the patriotism which adorn the characters selected to devise and adopt them. In these honorable qualifications I behold the surest pledges that as on one side no local prejudices or attachments, no separate views nor party animosities, will misdirect the comprehensive and equal eye which ought to watch over this great assemblage of communities and interests, so, on another, that the foundation of our national policy will be laid in the pure and immutable principles of private morality, and the preeminence of free government be exemplified by all the attributes which can win the affections of its citizens and command the respect of the world. I dwell on this prospect with every satisfaction which an ardent love for my country can inspire, since there is no truth more thoroughly established than that there exists in the economy and course of nature an indissoluble union between virtue and happiness; between duty and advantage; between the genuine maxims of an honest and magnanimous policy and the solid rewards of public prosperity and felicity; since we ought to be no less persuaded that the propitious smiles of Heaven can never be expected on a nation that disregards the eternal rules of order and right which Heaven itself has ordained; and since the preservation of the sacred fire of liberty and the destiny of the republican model of government are justly considered, perhaps, as deeply, as finally, staked on the experiment entrusted to the hands of the American people.
the experiment that began with these words is over.

That is really depressing.

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the bush administration's quiet campaign to broaden the power of the executive branch is the great (or not so great) untold story of the last five years. to me, that's what the supreme court nominations were about -- roberts was a tit-for-tat selection that bush knew he could count on when the big cases come down the pike (see hamdan), and miers was the one person bush knew would have his back, no matter what, if any, original thoughts she contained in her head. this is why i am only half-joking when i talk to friends about the 2008 bird-flu-epidemic-martial-law-declaration-non-election we have.

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I'd say that the bird flu pandemic is currently much ado about nothing 70 deaths since 2003. Although, Vietnam seems to be suffering more deaths. I think there was one case in Thailand the month I was there. I hope that the NSA enjoys my phone calls to Thailand.

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Monday, December 19, 2005


vladimir bukovsky

the washington post today ran an extraordinary piece by vladimir bukovsky articulating the destructiveness of torture in the context of the investigative machinery of the state.

Apart from sheer frustration and other adrenaline-related emotions, investigators and detectives in hot pursuit have enormous temptation to use force to break the will of their prey because they believe that, metaphorically speaking, they have a "ticking bomb" case on their hands. But, much as a good hunter trains his hounds to bring the game to him rather than eating it, a good ruler has to restrain his henchmen from devouring the prey lest he be left empty-handed. Investigation is a subtle process, requiring patience and fine analytical ability, as well as a skill in cultivating one's sources. When torture is condoned, these rare talented people leave the service, having been outstripped by less gifted colleagues with their quick-fix methods, and the service itself degenerates into a playground for sadists. Thus, in its heyday, Joseph Stalin's notorious NKVD (the Soviet secret police) became nothing more than an army of butchers terrorizing the whole country but incapable of solving the simplest of crimes. And once the NKVD went into high gear, not even Stalin could stop it at will. He finally succeeded only by turning the fury of the NKVD against itself; he ordered his chief NKVD henchman, Nikolai Yezhov (Beria's predecessor), to be arrested together with his closest aides.

So, why would democratically elected leaders of the United States ever want to legalize what a succession of Russian monarchs strove to abolish? Why run the risk of unleashing a fury that even Stalin had problems controlling? Why would anyone try to "improve intelligence-gathering capability" by destroying what was left of it? Frustration? Ineptitude? Ignorance? Or, has their friendship with a certain former KGB lieutenant colonel, V. Putin, rubbed off on the American leaders? I have no answer to these questions, but I do know that if Vice President Cheney is right and that some "cruel, inhumane or degrading" (CID) treatment of captives is a necessary tool for winning the war on terrorism, then the war is lost already.
a stunning, razor-sharp piece from a man who knows something of torture and totalitarianism. and its sad ending is a trifle, perhaps, but a damning confirmation of my views on this vulgar government, under whose stewardship millions are encouraged to be the barbarians that centuries of western religion and civility have worked assiduously to keep them from being.

Off we go, back to the caves.

Saturday, December 17, 2005


spying on america

it is one thing for a government to exceed the mandate of law with regret.

it is another when a government acts lawlessly and evilly -- and defends its lawlessness.

and it is yet another when its degenerate lawlessness is directed against its own citizens.

even as bush tells us that his administration's turning of the weapons of espionage against its own people wil be held to the highest (yet, of course, totally secret and unrevealed, and therefore effectively nonexistent) standards, we see the defense department already abusing its authority to spy on political opposition.

many who have watched as the american government since september 11 -- as it abandoned law and legislation alike, succumbing to abject fear, using an attack by barbarians as an excuse to barbarize itself -- warned that the evil of its acts overseas would, one day, come home.

that day is fast approaching, god help us. the administration has seen fit to threaten the press and the judiciary. now, the very people it sees as a threat to its authority and scheming worthy of monitoring. this is yet another sorry watershed moment in the decline of free society in the united states, whose liberty is underpinned only by the obediance of all -- not except, but especially the executive branch -- to the rule of law. our leviathan is slowly becoming a very dangerous thing to live under.

Tuesday, December 13, 2005


sydney riots

following only shortly on the riots of france, conflict between the cohabitating cultures of an iranic-muslim tradtion and the western tradition have flared yet again, this time in australia.

the vulgarity of australian nationalism

australia is a fiercely nationalistic place, and the idiom of aussie cultural uniqueness is everywhere on display. as such, australia, like france, views outsiders to the dominant european-derived culture variant as "un-australian" -- and does not fear to ostracize based upon such nationalist judgment. the plight of the australian aborigine was long the primary recipient of that abuse, and suffered near-extermination as a result; but, with the globalization of anglophone empire of which european australia is a part, the influx by trade of vast numbers of polynesians, southeast and central asians -- many of whom are muslim -- indispensable as helots to man the lower rungs of industrial and postindustrial society has forced the replacement of a horrifying policy of extermination with what amounts to a caste society comprised of a mosaic of resistant subclasses. in this way, australia is no different from france, britain or the united states.

as that system is challenged by ever-more educated, innovative and ambitious members of lower immigrant castes -- many of whom reject assimilation into what they more clearly see as an undesirable perversion of western civility for the particularity of their own traditions -- the vulgarized militia of the dessicated, desperate western management class become more and more aggressive, driven by the fear of a social levelling in chaos that could not only undermine their social position but finally end the habit of a western civilization that has been visibly dying unredeemed for generations.

as i wrote of the parisian riots:

what we are witnessing is merely a symptom of a much larger degeneration of western civilization -- the riots in france could and in fact have happened in every western nation to some extent, and indeed may spread throughout europe as they have already to belgium and berlin -- with bankrupt elites ensconsed in bunkers clinging to power where their actions merit no moral allegiance on one side; fractured suspicious masses consisting of a stubbornly multicultural patchwork of aggrieved proletariats demanding autonomy on all the other sides. the conditions are merely more intense in france, where the importance of an unified national culture is a high government priority. indeed, contrapuntally, many french muslims are asking for an analogue of the ottoman millet system which was adopted in the dessication of byzantine civilization.

france is, like all postmodern western nations, in dire danger of a devolution into outright tyranny as the management takes any and all steps to retain power in the face of this insurgency. but what one must work for is a moral solution for these aggrieved peoples -- a way to make them feel at home in france and indeed europe and around the world, to make them feel of our society and in harmony with it, not as muslim proletarians who happen to be in but not of the west or under assault from its military, political and economic engines -- reconciling their goals with those of western elites and bourgeiosie in a new social compact under law.

such a solution would have to entail changes which may not be possible in our ossified society, but are necessary nonetheless to avoid a regrettable future.
that regrettable future could look very much like these lawless streets of suburban sydney. time is running out on finding again the moral guidance that might save us -- if it is not already too late.

I have just finished reading a humorous but informative book on australia by Bill Bryson. The title is "In a sunburned country". Reading this book it becomes quite obvious why they would have the race problems that they do but it only leaves me with the question, why don't they have more problems than they do?

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True, Australia does have many racial issues, many under-current ones that go by unnoticed. But this post was humerous in its incorrectness. Sorry.

"australia, like france, views outsiders to the dominant european-derived culture variant as "un-australian" -- and does not fear to ostracize based upon such nationalist judgment."

That is the specific area I am reffering to. This is completely incorrect, and quite frankly a little insulting.

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tookie williams

gang leader and murderer tookie williams was killed today by the state of california in retribution for crimes he committed in 1979.

this man later became an author of childrens books and an activist against violence, apologetically rejecting his earlier, horrifying life and seeking atonement by acts -- including a negotiated peace between two of america's most notorious national gangs (one of which he had founded and led in his wayward years).

can we change? can we overcome our nature with our will? clearly, i think we can -- all of us are created with the potential.

if we can, then how can we condone ending someone's life -- unless, of course, we negate the value of life altogether? isn't that the point of a death penalty -- to subscribe to the fallacy that this person is "unchangable" and therefore must die? in saying so, do we not refute not only their capacity for free will but, knowing us all to be created equal under god, our own? and, if none of us are free actors with open-ended lives of moral possibility, what is the point of living at all?

inflicting the death penalty is a denial of the free will granted us by god, an amoral usurpation of authority long accorded to god by an increasingly desperate, fearful, managerial man -- and, being so, can only serve to further undermine any legitimacy of said management.

and if the death penalty isn't about that -- if it's about base revenge and intimidation -- i would suggest that it is our society and its government that has succumbed to the darkest of natural impulses and which should be vigorously corrected in all of our interests -- before the engine of state-power-engineered mortal revenge is put to use in more contexts than mere criminality.

of course, the moral deterioration of our society is heavily reflected in its government, which now seeks to manage society by coldly slaughtering its constituents on pretenses of rational management of the proletarians. i think it goes without saying that such egregious acts serve only to further antagonize the divided.

no one can condone this criminal's acts. but to kill him -- one of the more notable anti-gang-violence activists working today -- and not just him but anyone -- speaks to a society that has fearfully abdicated free will, charity and tolerance to indulge in deterministic fantasies and black, murderous desires.


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Thursday, December 08, 2005



this ap piece on the pace of change in chicago made my head wobble for a moment as i tried to comprehend its irony.

"It's about business and making Chicago safe for business, and if that means flushing a historic name down the toilet, that is what will be done," Fine said. "All you need to know is Chicago is tearing down real Victorian buildings at the same time it is putting up fake Victorian streetlights."
it makes me wonder just how much of their own history some chicagoans truly understand.

chicago was always the city of the future, the beacon of revolution, postmodernity and everything after in the western world, risen from nothing to a global metropolis in thiry years, was built, burned to dust and built again but larger. chicago was the avant garde of communism, of socialism, of anarchism, of suffrage, of vice, of art, of architecture, of commerce, of capital, of labor, of unity and of chaos -- it's been said that, in the fin de siecle, civilization peered into the unknowable through the lens of chicago. and it was terrifying. said historian perry depuis of the global reaction to the haymarket riot:

It was front-page news around the world. Remember Chicago is the world's window into the future. People from around the world really saw it as what city life was going to be like for them perhaps 10 or 20 years down the road. And when you got into the labor violence, what appeared to be proletarian riots, it was very frightening to people in many places around the world.
chicago was the seething cauldron from which the new world would be cast, for better and for worse. chicago was the white city of the exhibition masking the revolution of louis sullivan and the mountain range of the prairie built by man with the thinnest verneer of beaux arts, hastily applied by those sensitive to chicago's sudden detachment from all which came before it, who vaguely questioned -- without comprehending -- the consequences of abandoning the ancient anchor of western civilization. it was the plastic chicago of henry adams, the abandonment of old tradition and the adoption of the ideal in a "rupture in historical sequence":

One sat down to ponder on the steps beneath Richard Hunt's dome almost as deeply as on the steps of Ara Coeli, and much to the same purpose. Here was a breach of continuity -- a rupture in historical sequence! Was it real, or only apparent? One's personal universe hung on the answer, for, if the rupture was real and the new American world could take this sharp and conscious twist towards ideals, one's personal friends would come in, at last, as winners in the great American chariot-race for fame. If the people of the Northwest actually knew what was good when they saw it, they would some day talk about Hunt and Richardson, La Farge and St. Gaudens, Burnham and McKim, and Stanford White when their politicians and millionaires were otherwise forgotten. The artists and architects who had done the work offered little encouragement to hope it; they talked freely enough, but not in terms that one cared to quote; and to them the Northwest refused to look artistic. They talked as though they worked only for themselves; as though art, to the Western people, was a stage decoration; a diamond shirt-stud; a paper collar; but possibly the architects of Paestum and Girgenti had talked in the same way, and the Greek had said the same thing of Semitic Carthage two thousand years ago.
if chicago now risks death to grasp for some semblance of its shallow roots in victorian lampposts and department store names, it is only because it has spent its whole history destroying history and now is finding how disorientingly little there is left to stand on when the past has been made to dissolve under the applied force of man's ideas alone.

as chicago continues to fade now from the forefront of the world, perhaps it is appropriate that latter-day chicagoans disavow the thoughts and words of their revolutionary ancestors to cower in reactionary fear of what the cult of speed and perpetual change has wrought, left to dogmatically console themselves by protesting new stadiums and new buildings and really just about anything new.

but that will not and cannot constitute a preservation of the history of chicago -- for chicago was built as a city without history, only a future, for better and for worse.

Thursday, December 01, 2005


propaganda: iraq

matt welch takes on the apologists for american government propaganda in iraq, exposed in this los angeles times article.

i would submit that most iraqis probably know, just as most americans know about fox news, just what they're being fed and by whom. but this is not a catchall forgiveness -- clearly, just as many americans really do feel fox is telling them some "hidden truth" long covered up by a conspiracy of some kind, many iraqis well choose to believe what they would prefer to be true rather than what is true -- or, at least, use such propaganda as excuses to publicly mitigate acts that were conceived with ulterior aims in mind.

but more disturbing is the revelation that the american government had hopes that such propaganda would be repeated in the united states -- where the veracity of the sourcing is much murkier by virtue of being at a distance -- as "evidence" for american public consumption that things really are getting better in iraq when they are not. such propaganda quickly can become fuel for those who would seek to perpetuate american militarism in any case.

this of course isn't the first episode of propaganda to emit from this administration. policy propaganda directed at the american domestic population has previously been exposed; the jeff gannon scandal followed the armstrong williams scandal. all of that, as well as the expressed intention to attack reporting channels beyond its control, be it newsweek or al-jazeera.

such is the pattern of behavior than one might expect of an administration whose defenders are admirers of machiavelli and the cause of the italianate humanists to resuscitate spartanism. but the evil of that path should not be doubted -- nor should the futility it must encounter nor the damage it can do to the united states itself.

I don't think the news on Fox is much different than other channels. The difference is all in the talking head opinion shows. If some people can't figure out the bullshit, I hope they don't vote.

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You and I have markedly different qualification for "scandal" - do more than one in a hundred remember either Williams or Gannon?

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Oh please, spare me the indignation. FDR not only piped in pro-American propaganda and wiretapped the press, he called NBC into the Oval Office and told them they'd either toe the line or be taken over, and yet the republic survived.

But the Pentagon under Bush prints a few positive stories in the Iraqi press and a functionary gives a single grant to an admin-friendly voice, and suddenly our perspective-deficient wannabe-philosopher host instantly begins spouting about "resuscitating spartanism." Maybe you should think about resuscitating your prescription for antipsychotics.

I don't recall anyone getting upset with PBS' taxpayer-funded left-wing advocacy, or for that matter the taxpayer-funded leftist lunacy that emits from our educational system.

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